Branch Closures Could Have Devastating Impact on Irish Economy

The Importance of Local Bank Branches for SMEs

A recent study by the Central Statistics Office (CSO) highlights the significant role that local bank branches play in supporting small and medium-sized enterprises (SMEs) across Ireland. The research found that:

• 31% of SMEs value the local connection when choosing where to bank
• An additional 9.5% opt for a particular bank due to its reputation for good client relationships

Consequences of Branch Closures

However, the trend towards branch closures could have severe consequences for these businesses and the regional economies they serve. For example:

• 21.5% of enterprises choose a bank because it has a local branch
• 41.7% refuse loan applications when rejected by one lender rather than seeking an alternative

The loss of these branches could lead to a lack of access to funding for many SMEs, exacerbating economic inequality.

Financial Exclusion in Ireland

The CSO study also revealed that:

• 7% of the poorest 40% of households do not own a bank account
• 17.9% of adults have literacy problems sufficient to exclude them from online banking
• One in nine people have never used the internet

These figures highlight the significant financial exclusion that exists in Irish society.

The Impact on Young People and Those with Limited Digital Literacy

Young people, who are already less likely to own a bank account, may be disproportionately affected by the lack of access to financial services. Furthermore:

• 1 in 4 Irish adults score at or below level 1 on numeracy, making it difficult for them to manage their finances effectively
• The National Adult Literacy Agency reports that one in nine people have never used the internet

The banking industry’s focus on digitization and online banking may not address the needs of these financially excluded individuals.

A Public Debate is Needed

A public debate is needed to ensure that banking facilities are made available to those who are socially excluded. Industry analysis tends to focus on broad trends, such as the decline of cash versus card or mobile phone payments, without considering financial exclusion or those who cannot or will not access new technology.

Conclusion

In conclusion, the closure of bank branches could have devastating consequences for SMEs and regional economies across Ireland. It is essential that policymakers and industry leaders work together to ensure that financial services are made accessible to all members of society, regardless of their digital literacy or socio-economic status.